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How could Pope Francis be so wrong on capitalism?

I have to say that I was saddened by Pope Francis’s recent assertion that “rampant capitalism” is a source of many of the world’s ills.

I say this as a former Catholic, who still appreciates the Church, and the spirit of Jesus which I think Pope Francis embodies (as far as I can see) to a much greater degree than Pope Benedict who was put to pasture for good reason. I believe that Francis has his heart in a good place, and that his efforts to reform the Church (to the degree he can) are long overdue.

I say this not as one who pays particular attention to the Vatican, but as a lay person who picks up bits and pieces of policy from the news. My general perception is not an informed one, but one of feel. I could be wrong with Francis.

But what is absolutely clear to me is that Francis is very wrong on his economics. Not only is he wrong, but his assertions are potentially dangerous, as he does not appear to understand the inherent justice–yes justice–of markets. He (I believe unintentionally) gives fodder to the controllers of mammon, the denizens of the state.

Below is a quote from Francis on “capitalism.”

It is clear to me at least that Francis comes from a position of good will. I believe he cares for the world’s poor. I believe he honestly wants a better world, a more just world. And in part of the quote he’s right, we should attack the “structural causes” of inequality, not that financial “inequality” (and there is an important difference between equality under the law and economic equality) is necessarily bad.

But the rest of the quote reflects a fundamental misunderstanding of markets, deeply rooted in 20th Century statism, which still clings to the minds of many people today. (Especially in my experience older folks.)

The reason people tend to be poor is not because of “unfettered capitalism.” People don’t tend to be poor when people are free to voluntarily trade goods and services. People do not tend to be poor because people engage in the “win win” exchanges which are at the heart of capitalism. No, people are poor because people with power seek to restrict the flow of information and to institute privilege through the state (which can take many forms). People are poor where there isn’t capitalism. From the slums of Chicago to Kolkota this is true.

To the degree that the free voluntary exchange of goods and services is restricted poverty grows. This has been shown time and time again, from the earliest economies of man.

But this stands in contrast to what we have been told for nearly a century, and to what Pope Francis (apparently) believes. How is it that the great men (and in some cases women) of the 20th Century (and still many in the 21st Century) clung to the idea that the state is the great equalizer, and that capitalism is in fact the “unjust” force?

Mussolini, to Hitler, to Stalin, to FDR, to Mao, to Richard Nixon, to Jimmy Carter, and really the entire political class post World War I around the world, believed that man could engineer prosperity. They believed that the poverty and injustice they saw was a reflection of an untamed system to be bent to serve the goals of man. What they didn’t realize was that it was actually the folly of man made government which to a large extent created the problems they were convinced the state could solve.

Many of the “great” men of the 20th Century couldn’t see that feudalism was just the embryonic form of the state, not a symptom of “capitalism.” The Marxist “train of history” was not moving down the track of enlightenment at all. It in fact was headed down the track of broadened and systematized feudalism. Marx, and his followers (those who knew they were his followers and vast many who did not) did not understand that for all the pretty bows, and regulatory whistles the reason life got better for the average person over the years was because of the shining rays of innovation and free exchange which occasionally burst through the cloudy gloom of the state. Things progress in spite of the state. But that is “an inconvenient truth.” (A real one.)

In some cases (to greater and lesser degrees) the members of the 20th Century political class didn’t actually care about a better world at all, but were interested in power for the sake of power. But it’s probably fewer of these people than we think. Power hungry people like to think they are pursuing power for some greater cause. It’s much more psychologically satisfying that way. It also makes killing the enemies of “injustice” much easier.

Markets resolve themselves. Markets clear. If there is an inefficiency within the market, the market–so long as it is not impeded by often well meaning but largely ignorant managers–will take care of things. It may not resolve things in the way some of us would like, but it will do it almost invariably better than the state.

Take for example the financial crisis which began in 2008. Had we let the market clear, that is let GE, Goldman Sachs, GM, Chrysler, AIG, etc. die with the associated short term fallout, we would be in a much better place today economically. The assets of these firms which were valuable would have been picked up by better managed firms and used more efficiently. New businesses would have been born from the short term carnage. Jobs would have been created.

Instead the government intervened in the marketplace under the auspice of preventing “worldwide economic meltdown” (it was a reversion to the mean from the unsustainable blip up caused by Alan Greenspan’s easy money policies) which was designed to get the broader public, “Main Street” on board with bailing out the world’s rich and powerful.

Strangely the advocates of “social justice” jumped right on the bailout bandwagon. The solution to the “crisis” which largely impacted the rich and powerful, which was caused by the state, was to give the state more power so that the vested rich and powerful remained rich and powerful.

Huh?

This is not capitalism. This is crony capitalism. Crony capitalism is the current worldwide economic system. It is what creates poverty to a large extent, and restricts opportunity for the poor and the marginalized.

Capitalism, voluntary and non-coercive economic action, is the best vehicle for liberation on a wide scale there has ever been. Pope Francis, who I believe genuinely cares for the poor of the world, could do much good if he came to understand this fact.

About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, his work has been featured at Breitbart.com, Reason.com, NPR.org, Townhall, The Daily Caller, and many other publications. A graduate of Mary Washington College he lives just outside of Washington DC where he can keep an eye on Leviathan.

"I say this not as one who pays particular attention to the Vatican, but
as a lay person who picks up bits and pieces of policy from the news. My
general perception is not an informed one, but one of feel. I could be
wrong with Francis."

In other words, I have only partial information on a subject I have little interest in, not an informed opinion. However, rather than learn something from informed sources, listen to what I feel because what I feel is more important than what another informed person knows.

Excellent! Nicely done, showing respect, but firmly and clearly stating the truth about Capitalsm and Crony capitalsm, THERE IS A BIG DIFFERENCE!

Further, I want Catholics to realize they have been misled over the years by people who use their care for the poor to lend an ear to leftist propagander which sounds like they care,(as good christians) for the poor! Democrats have you believing that their welfare state is compassion, when all they are doing is INCREASING the number of needy, rather than reducing the need for government largess: it ends up creating the disaster of the American black disenfrichisement, the opposite intention of their aims!!

He is right. He is not condemning capitalism per se, but the greed and the impact of unfettered capitalism. I want it all and I can do what I want without regard for others or law.

When the smallest percentage of people have the super majority of wealth the inequity results in needless suffering, illness, wars, revolution, death and chaos in the world. Soon the monetary systems must falter as the have nots replace the medium of exchange and their stores of value. Thereby making the haves lose their wealth as their stores of value and exchange become worthless.

"Crony capitalism" is how literally everybody outside of the libertarian milieu understands the word "capitalism" because that is exactly what it meant when the free market economist Thomas Hodgskin coined the word.

Nick you miss the part about "absolute autonomy" of the markets and financial speculation. Here in the US, our capitalistc system is not absolutely autonomus. Businesses can not do what ever they like. We are a country of laws. The laws protect the people and the laws protect the busineses. Other parts of the world are not regulated such as this. When I read the quote, and the rest of the document - not just a single sentence you cherry pick - I really do not see where he is talking about about a regulated market economy such we have.

"Capitalist economy efficiency also results in a curious kind of reductionism. Although we all recognize the difference between packaged food, heated up in a microwave, and a fine meal, prepared with care from original ingredients, the spirit of capitalism actually works to destroy any acknowledgement of the importance of such a difference. Since each type of meal will eliminate our immediate hunger, capitalism’s inherent logic tends to compare them merely on the basis of cost, to the detriment of the meal prepared with care, because this latter seems to violate the near-sacred imperative of economic efficiency. If we can obviate our pangs of hunger with cheap food, is not this more economically efficient than the long and more costly process of preparing food by hand? We thus ignore the health consequences of eating packaged corporate food, as well as the destruction of local culinary traditions and skills that packaged food entails. Food made with real ingredients is seen as a luxury, a needless expense, something that is all right if you have enough money, but in fact unnecessary. In such a manner we congratulate ourselves on how inexpensive food is in the United States. That in fact our food is largely denatured, filled with pesticides and artificial ingredients, matters little or not at all, since it meets the obvious and measurable standard of being able to still one’s pangs of hunger. If the rich or the counter-cultural want better food, then let them pay for it. The rest of us (so we are implicitly told), should be grateful to have a relative abundance of cheap edibles, never mind the long-term health effects, the destruction of local cultural traditions, or the poisoning of the environment by means of pesticides and poor farming practices." Thomas Storck, The Distributist Review

But the corporations are making money, and in Capitalism, that's all that matters!!!

"But wealth obtained indirectly as profit out of other men’s work, or by process of exchange, becomes a thing abstracted from the process of production. As the interest of a man in things diminishes, his interest in abstract wealth—money—increases. The man who makes a table or grows a crop makes the success of the crop or the table a test of excellence. The intermediary who buys and sells the crop or the table is not concerned with the goodness of table or crop, but with the profit he makes between their purchase and sale. In a productive society the superiority of the things produced is the measure of success: in a Commercial society the amount of wealth accumulated by the dealer is the measure of success." (An Essay on the Nature of Contemporary England, 1937)

"A craftsman who owns the means of production himself wants to make enough money by means of his work to support his family, certainly, but generally he will also have some interest, some pride, in his skill and in his product. He will see himself not primarily as a businessman, but as a brewer or a shoemaker, and for the most part will be interested in the quality of his product apart from how much he can sell it for. Although this interest will be greater in some than in others, for the most part it will be the case that the “man who makes a table or grows a crop makes the success of the crop or the table a test of excellence.” But the man who hires another to make the table or grow the crop for him usually will not have this same interest. He is not a craftsman, he can hardly have the professional pride that only a craftsman can have. His interest will be at best in management and marketing, or worse, in finance, or as a stockholder, in being a merely passive owner of a corporation, content to receive dividends or capital gains, having little interest in or knowledge of what the corporation actually does."

And herein lies the problem....divorced from anything but the bottom line, the Capitalist soon turns from producing goods as a good for mankind and instead focuses on simply making the bottom line bigger. This is what happened in the housing bust of 2008. Bigger, bigger, bigger.....BOOM!!!

Of what good are rules and regulations when money can buy politicians?

You have no idea what you are talking about, Nick. Capitalism is the concentration of goods in the hands of a very few -- the 1%. It is based on a vicious inequality of the worlds goods in the hands of the few and privileged. It rewards those who are crooked (usury and interest) those who are born into wealth with no substantive ability to actually produce anything, and it is the flip side of Socialism.

The Catholic model is the Distributist Economic Model in which the goods of the world are more fairly distributed among all men. In the Distributist Model, all men have the right to private property and the free exercise of trade and production which supports them and their families. This is different from the Capitalist Model where a select few own all the income producing properties and make men wage slaves by hiring them as cheaply as possible and enslaving them to usurous credit which takes them years to dig out from.

You really should look up the Distributist Model and also read some Chesterton and Belloc on the subject.

This "rampant capitalism" is new one for me. I've not read it defined in any economic text books. :)
There's nothing strictly wrong with starting a business and failing. Most of the best and successful entrepreneurs in the world have done that. It's called "life education" and is probably better than any business school. Also, there isn't strictly any "waste". The money that went into the failed business paid someone's wages either directly or by the purchase of other business' capital goods.
It's true that there have been recessions and depressions but these arguably have been caused (up to and including 2008) by government economic mismanagement and *excessive* regulation not because of the markets ("regulation" in the Capitalist sense is not laws that punish wrongdoing but government intervention in market factors, the former will still exist under free market Capitalism).
You say, "In rampant capitalism, winner usually is that man or women who ruthless, unscrupulous, greedy."... assuming this "rampant Capitalism" is something we have had at some point in the past and refers to something that is at least somewhat free (we haven't had truly free market Capitalism yet so we cannot fairly judge it - there are reasons to argue it will have the opposite effect, but that's another topic) then in fact, historically, you will find the opposite is true: The winners in business are those who have treated people fairly, the consumer and the worker (I'm talking about in the majority of cases, not that you cannot find some examples where a "successful" business has treated people / the environment badly).
The idea that 99% of people in Western capitalist countries are in poverty or on the fringe of poverty is, frankly, absurd. You should go to countries where there is real poverty. Strangely, you will not find capitalism there.
The answer to abuses of the capitalist system is to empower the consumer, not the government. For the government: Give consumers more choices (by not restricting choices); don't prop up businesses that cannot provide products or services at reasonable cost; don't excuse people / corporations of wrongdoing because they fill your coffers with donations. For us as consumers: get educated so that your dollar supports only businesses that do good business; educate others to do the same.

Capitalism does not exist without laws to punish wrongdoing. "Regulation" in the capitalist sense is about government intervention in economic factors, not laws created to punish immoral actions. The latter will still exist under Capitalism.

It should be noted that the pure "free market capitalism" that this page is in favour of has *not* been tried - at least not on a national level in its pure form. Some degree of capitalism has been tried to greater or lesser degrees throughout history but never has in its purely "free" form. The benefits that Danny is referring to are those that come from the parts of the existing system that are allowed to be still (relatively) free - free trade, private innovation & investment, market setting of prices, property rights (extending to the person), etc.
The "cons" that you say arise from Capitalism (other than those which are a product of human nature that cannot be prevented by politics or economics e.g. people will always choose to lie or steal) are those that arise when government interventionism / cronyism stifles competition/innovation, refuses to punish criminals because they are rich, bails out corporations because they are "too big to fail", makes inevitable mistakes when trying to regulate an essentially unpredictable complex system, etc. These things don't come from Capitalism but "crony capitalism", Keynesian (mixed) economics and, historically, "Mercantilism". The other stuff you talked about just come from stereotypes written into left-wing propaganda leaflets that are not in any way congruent with average reality so its not really worth addressing them, frankly.
"Educated" should refer to a person with a "balanced education". Have you studied the materials of those who oppose your point of view? I don't know whether you have or not and I'm not claiming you haven't, I'm just saying it because it's an important point that needs to be made.

Also, no need to quote the comment you're replying to - it's easy enough to follow the thread when the posts are so close together. It actually makes it harder (for me, at least) to follow when you quote the whole comment you are replying to. Anyway...

You're probably one of those idealists that still believe in the "Free Market"......sorry buddy, it's never existed, and as long as there are ruthless powerful men at the helm of the world, it never will. As long as the Mafia, Military, and Oil Cartels are still in power, the spoils will go to the victors I.e. Those with the most Cronies!

Are you fucking kidding me? The "inherent justice" of markets? Have you not heard about LIBOR??
Have you not heard about the New York Stock Exchange funneling data to insiders a full three seconds before the general public? The Entire Game is Rigged, and the Vatican is at the Center of it all!! Oh by "justice" I guess you mean Goldman Sachs paying a $9 Billion fine for mortgage fraud.....after they Bilked a couple Trillion from the American Tax Payer!! Sorry, you guys just lost any credibility to anyone actually paying attention to the inner workings of the Economy!

Nick, I'm not proposing anything to fix poverty in China. China is a sovereign nation responsible for fixing its own poverty. I'm simply saying, let's not aid and abet the exploitation of slave labor there and the loss of valuable jobs here.

There is a lot to be said about different forms of government. But few people bring up the points which bring down any government, the people within it. Their morals, integrity, dictate how the government will succeed or fail. When people in government can be bought by the privileged elite big money corporations etc.... we get we have now. They fight regulations lost and often win. many times it's for their benefit and not benefit of the whole. I realize that they're not self actualized, and only care about money and power, that's what happens any form of government. So what's the key in making a perfect government. I believe it's education and a strong family unit nurturing morality and ethics. Using the golden rule that Jesus taught which Buddha preached 500 years before. Not the golden rule of corporate greed he has a gold rules. That would would be the start , of course there is more to it than that but that's a start.

How do you have 'unfettered' capitalism WITHOUT crony capitalism? We live in a world where many people -- especially people whose primary goal is making money (i.e., 'capitalists') -- will do anything to make money, no matter how unethical or inhuman.

So how could anyone who wasn't born yesterday ever think that crony capitalism is not the inevitable result of capitalism? It's a fantasy to think otherwise.

^ Danny, everything you said was so far down the line of pure idiocy.
"Charles Gannon Demonstrates profound ignorance about history, economics, and political ideology. He's full of left-wing radical piffle with not much fact. What you're describing as capitalism is not capitalism its crony capitalism and socialism wrapped together." i did not at all show any ignorant when it came to history, economics, or political ideology. and yes i may be a radical i will admit that but i have even said i will supply links to back up my facts (maybe not FOX or CNN as you watch apparently) and what i described is not crony capitalism, its all capitalism. every time capitalism has been put to practice it has oppressed the workers and made the higher up rich off their labor, and if you think that's bull then i dare you to look up every time from when it was first started to today when capitalism has been put in to affect, and you will see it has always been the same, the workers are oppressed and work for small wages while the boss gets rich off of their labor and does little to help. its always been that way under capitalism because that IS capitalism.
"The uneducated have a hard time picking these two apart while sipping on the great teat of capitalism. You lack the courage of your convictions if you really believe communism was the way to go you would pack up and move to a communist country to live your dream." coming from a person who is too close minded to do the actual research, you call me uneducated? also, i would be in Cuba right now if it was not for two reasons 1: my boyfriend lives here and 2: im poor.
"You're very actions bely your ideology, you want the benefits of capitalism while bemoaning its problems. In less than 200 years capitalism has brought more benefits to more people than any other ideology in the history of man. Without it we would still be animals living in caves burning animal dung trying to stay warm." i don't want the benefits of capitalism, i fucking don't ask for it. unlike you selfish assholes, i put the poor and needy before that piece of paper your all willing to die for. and capitalism has not brought benefits to anyone but the bosses and higher ups, it has made the rich get rich off of the workers enslaved labor, socialism benefits all workers within the job place because it shares the pay equally and their is enough for them to live a happy life with all needs filled and taken care of.

I see the irony in his comment when I've heard that the Catholic church holds the most land worldwide. How can a church own so much riches and yet there are people starving? Why don't the church provide all these hungry souls spiritual nourishment to sustain them and food to keep up their bodies? The church like all crony capitalist companies are greedy to the core but refuse to help the people in need.

True but, and it is an important but, religion is not necessary to keep a boot on the neck of the populace, Communism (big 'C' communism) did a far better job than the medieval Popes ever did. - Without multiple stops in place tyranny is the natural lot of humankind.

Let us not forget that throughout history religion of every form was used as a boot on the neck of the populace. Catholicism especially, it worked with government to keep everyone in their place and it seems that it wishes to return to that role yet again.
God is the one they should have authority not man in the name of religion.

Charles Gannon Demonstrates profound ignorance about history, economics, and political ideology. He's full of left-wing radical piffle with not much fact. What you're describing as capitalism is not capitalism its crony capitalism and socialism wrapped together.
The uneducated have a hard time picking these two apart while sipping on the great teat of capitalism. You lack the courage of your convictions if you really believe communism was the way to go you would pack up and move to a communist country to live your dream.
You're very actions bely your ideology, you want the benefits of capitalism while bemoaning its problems. In less than 200 years capitalism has brought more benefits to more people than any other ideology in the history of man. Without it we would still be animals living in caves burning animal dung trying to stay warm.
One so ignorant should not be allowed to opine, it only confirms publicly what should be a private problem.

Thinking on this for a day am glad the subject was brought up and that this is a debate worth having - but - sadly, our little friends on the Left will use it as an arrow in the propaganda quiver and the debate will never happen.

Individual command for certain followers in discipleship. Individual charity decisions not the same as gov confiscation. Very very different. He never condemned EARNING wealth in fact many parables about good investments. Never did He say that government should exert control of out economic lives or take our money. I have read THE BOOK and thus I do not need Pharisees interpreting for me.

@Silent Majority2 As opposed to Protestants lending their ears to right wing propaganda which states, either openly or by inference, that being rich is good and we spit on the poor because they are lazy.

Democratic policies are indeed designed to create more poor, destroy the black family (which they have done a legendary job of) and keep the blacks on the plantation as ignorant, uneducated, and in jail. Democrat policies have all but destroyed the black family.

But right wingers have offered little in rebuttal other than smoke and mirrors. If you want to help a man, you get him onto his own property, you teach him a skill or trade that will support him and his family, and you make of him a free man in a free society. Capitalism does not want this. Capitalists want monopolies over the businesses they are in. We see this in Cargill and Monsanto buying out the family farms or driving them out of business if they won't sell. Same thing with Wal- Mart and the other box stores closing up family run businesses.

And they sound so pious doing it, claiming to be our "friends" because they are saving us a quarter on a can of tuna fish.

Of course, the bottom line is that the government has NO BUSINESS in the social welfare business at all. That is the job of the Church, not the government.

@Edward Hara Y'know I sometimes have a different take on how the world wags than Nick does, but I want to thank you for telling him that he doesn't know what he's talking about. Such totally unsupported arrogance was definitely the funniest thing I ran across today.

@JonPOgden@Edward Hara Sorry. He doesn't know what he is talking about. Period. Any number of good Distributist apologists would take him apart in a debate. He has drunk the Capitalist Kool -Aid and all he can do is spout of the usual talking points.

He needs to do some serious study. Capitalism is a pox on mankind. So is, BTW, Socialism, which is the flip side of Capitalism.